May 16 (Bloomberg) -- Dixons Retail Plc, the U.K.’s largest
consumer-electronics retailer, said it will report annual pretax
profit at the “top end” of analysts’ predictions after fourth-quarter revenue beat estimates on increased sales of tablets and
services such as software tutorials.

Revenue at stores open at least a year rose 11 percent in
the three months through April, the retailer said in a statement
today. That’s faster than the prior quarter’s 7 percent gain.
U.K. and Ireland sales jumped 13 percent on the same basis, more
than the 7 percent median estimate of 10 analysts compiled by
Bloomberg. Revenue gained 14 percent in northern Europe, beating
the 7 percent estimate.

The owner of the PC World and Currys chains is training
staff to improve customer relations and is selling higher-margin
services to overcome cheaper online competitors. The popularity
of tablets and the decline of competitor Comet have also helped
the retailer. Finance Director Humphrey Singer said Dixons may
sell its unprofitable Pixmania online unit.

The retailer had a “stonking fourth quarter,” said Philip
Dorgan, an analyst at Panmure Gordon with a buy recommendation
on the stock. “The U.K. is clearly gaining share, has obvious
margin opportunities and will continue to benefit from the
demise of Comet.”

Dixons rose as much as 10 percent in London trading, the
biggest gain in more than six months, and was up 6.3 percent at
38.8 pence at 9:33 a.m. That boosted the Hemel Hempstead,
England-based company’s gain this year to 37 percent.

“This strong year puts Dixons in the best position it has
been in for many years,” Chief Executive Officer Sebastian
James said in the statement.

Pretax Profit

The company said it expects to report underlying pretax
profit for the year ended April 30 at the upper end of an
estimated range of 75 million pounds ($114 million) to 85
million pounds.

Sales of tablets, particularly red models, are popular, and
Dixons is cutting prices to compete with online-only rivals,
James said on a conference call. The lower-margin tablets and
price reductions pushed the gross margin down 0.7 percentage
points in the fiscal year, worse than an estimate by Citigroup
analyst Assad Malic for a 0.55 percentage-point decline.

Dixons is interested in exiting Pixmania through a “sale
process,” while closing the business, which operates primarily
in France, would be “extremely difficult,” Singer told
reporters on the call.

James said the company’s business in Turkey is very small
in a market that’s “consolidating quickly,” while Italy is
“too small for long-term strategic stability.” There is
“nothing wrong” with Dixons’ market-leading Greek business,
the CEO said. Same-store sales declined 5 percent in southern
Europe in the quarter.